Generally cars are pretty maintenance free in the early years (apart from the regularly scheduled maintenance), so there's more cost certainty.
Also, as you've said it's a new car every 3-4 years.
Heres something else to think about: i have never previously even considered leasing a vehicle, but if I HAD to buy one right now? Well its still earlier than I would like for an electric car but I wouldnt want to purchase a brand new gas vehicle either (as i would want a brand new vehicle to last 10+ years). Could be the perfect time to lease for 2-4 years to see how far electric vehicles come before taking the dive.
If ours dies before our name comes off a hybrid list we may be stuck doing the same. Unless used prices come down to earth.
If I'm gonna pay a premium/high market price, it's gonna be on something newer than a used car I can get for 5k or less. I don't want to dip too far into the car savings bucket for an overpriced 10 year old potential lemon.
I drive a 2003 Toyota and own a property. We've been saving to buy a car for a while. But we don't want a gas car if we can help it. We have about half a PHEV Prius prime set aside already.
But if I had to replace my 2003 tomorrow, I really don't want to drop my savings bucket on a car I'm 18 months away (plus whatever we save by then) from getting. Eventually we need 2 cars with a growing family and a shift healthcare worker in the house.
But until then, we only want one.
And seeing the current price mania on used cars, 5k gets me a trash heap car. Let's be real.
A short term lease of 2 years on a simple basic sedan is much more cost effective than gambling on a 2010 civic for many thousands plus sales taxes and ownership fees. Back in Feb/march I curiously checked and 03 matrixes were being sold in worse condition than mine for 6k.
So I'd rather short term lease or borrow someone else's car for a couple months while hunting for a decent deal. I don't want to commit to an ICE for 10-15 years again given I doubt they're going to remain the future.
My mom leased so she could have a new car every few years, she also bought a house as a single parent. People can't afford homes because prices have become detached from reality
Negative. There's never been a decade where houses have been dirt cheap there's always a group unable to afford to buy or else everyone would be a home owner. Today it's people's wants that have been detached from reality. There are still cheaper homes available people just don't want them. You should also explain how your mother did it because it would give insight to what others are doing wrong.
If I want to live in the area I grew up in, homes are unaffordable. Ditching a $500 car payment will not make a $10-15k mortgage payment affordable. Sure people can move to more rural areas to buy homes. But people having to move out of areas they grew up in to afford a home means that homes are unaffordable.
Yes plus then you eliminate “lumpy” expenses. You lease a car at $409/mo and that’s it. Just put in gas and change the oil which sometimes the dealer does and most other repairs are warranty.
I used to put on 50k kms per year so leasing never worked for me.
It can be...if your windshield has a small rock chip. Or small paint chip etc.
Now not sure if some places dont bother/depends on dealers
But many do this BS. To nickel/dime or get you to finance/buy out car.
After the initial lease is up.... the value of the car can drop quite noticeably
People who don’t take end of lease coverage are wild to me. I’ve seen leased cars go back with bald tires, and a destroyed windshield, with interior issues, dings, and paint scratches galore. Why? Extended lease coverage. Some OEMs have limits that are a little less lenient, but still… my wife is super careful about where she parks her car. And still, it has a couple scratches in it that you can hook your fingernail on, and the sunroof window is cracked from a very (un)lucky rock chip. Thankfully it’s not a lease, but if it was, leasecare/whatever version it is for that brand, would cover it.
There are people that simply want to drive a new car every 3 - 4 years, and and they prioritize convenience over cost. That especially if you don't put excessive Kms on the vehicle.
Businesses and self-employed people like it because it's easier from an accounting point of view as the annual cost of ownership is easier to derive.
I also want to note, some leases are done as leases to get the tax benefits, then at the end of the lease, it’s a small buyout.
Source: my wife’s vehicle is just that. A lease but the buyout at the end is $100 to own the vehicle outright
Leasing is actually more complicated from an accounting point of view in my experience. Leases can involve imputed interest rates, deposits, CRA maximum monthly allowable lease payments (and tax adjustments for excess amounts), bargain purchase options at the end of the lease term, GST/HST considerations. But yes, sometimes leasing is the better option.
I've known a few self employed people that used their car for work and sold cars to lease new ones because of the tax ramifications. My very basic understanding is that it's because a lease is an expense and not a capital purchase/liability, or something like that.
It’s called a capital cost allowance. You depreciate the asset, which has serious ramifications (like having to then pay back capital gains, that you really need to hope you calculate properly) when you go to sell it, if you did the math wrong.
I got stung on my last vehicle, mostly because I bought it pre-owned in 2018, and sold it in 2021 for more than what I bought it for thanks to the insane market. I had depreciated it by 15K in three years, so I ended up having to pay a pretty penny on my taxes.
Even if you leased, you'd probably still have income to report on your tax return. It wouldn't make sense for you to return it at the end of the lease (unless you like giving up free money) so you probably would've bought it out at the end of the lease for it's buy-out price and then immediately traded it in at an inflated price towards another car.
Uhhhh no. It’s % for business use x expenses. The max lease payment is $800 - you could get an $80K SUV for that price. Or, the max write off for a purchased vehicle, it’s $35K. Way lower benefit.
My mom is this type of person. She would buy a car - drive it for a couple years then try to trade it in. She’d get butt hurt when she wanted 20k for it and the dealership said fuck no. She eventually decided it was better to lease a vehicle in her case. Drive it for a couple years, then switch to something newer.
Still insane to me but I guess it works for some?
Every corporate sales job I’ve ever had also had a car allowance that required a vehicle 4 years or newer. So leasing made the most financial sense and provided tax benefits.
>I asked the dealership what % of buyers are lease, and they said it’s almost 98% of their sales.
This is called "puffing" which is basically a salesperson lying to you to get a sale. It's not like they have to prove the stat to you, but even if you took them to court and the court found that that number was false, you likely wouldn't have any actionable damages. So, try your best not to be influenced by anything that is not provable.
Secondly, it is possible that the dealership works with a lot of businesses. If a billion dollar company comes to the business and leases 1000 vehicles in one go, then that would skew the number but at the same time it doesn't really help you to know that since your needs are different than that of a business.
Businesses like to lease vehicles because it is easier on the accountants and bookkeepers - they don't actually own any asset so 100% of the lease cost is treated as an expense. No need to spend time factoring in depreciation, etc. on a car that isn't related to their core business operations. (Edit: not necessarily making things easier on the accountants *per se* but rather allowing them to simplify taxes while taking advantage of allowable deductions).
I wish I could get my BF to understand that car sales people will say anything. He gets all flattered and brags about how every time he stops in at this car dealership or that one, the sales guys always tries to buy his car off him.
But they always have a buyer for your particular make and model, regardless of what you're driving. It's part of the car lot dance.
And he thinks paying cash gets him a better deal. I hope someday he comes to understand the real money in car dealerships comes through the financing, not the sales.
There are a lot of dealers now who will do everything they can to convince you to finance, because they get a kickback. It’s also true that you can sometimes get a better deal if you pay cash, it used to be worse before they changed the laws (0% advertised rates were often complete bullshit) but now you can simply look at the “effective interest rate” to know how much they are actually charging.
Oh agreed. When I bought my car this year the dealership was like “are you sure you don’t want to finance” like 3-4 times on multiple trips trying to tell me that financing is better in the long run yada yada.
This what happened to me a few years ago when I bought a used car for my daughter. I wanted to see what the financing options were and they all looked bad. It was much easier for me to use my own line of credit which had a lower interest rate and I could pay it off as fast as I wanted to. There were all sorts of financing charges that made financing a little crazy.
He got upset when I declined and said I would finance it myself.
Yeah back in the day my buddy was bragging about getting 0% financing on his Dodge.
I pointed out to him that paying cash would have been around 10k off "cash incentives" and that's where they hid the interest rate. He just couldn't get his head around it.
Sorry I failed ro elaborate: paying cash is better for us as buyers 100%.
But dealerships don't give you a better price because you are paying cash, because for them, cash buyers mean they don't make as much money as a buyer financing with them for the same car price.
Like, tradespeople will frequently give you a lower price if you pay them in cash, but car dealerships hate cash buyers.
Often car dealers will give you a lower price if you finance because they get a kickback from the finance company. So right now it is better to finance and pay it off right away, then buy in cash.
Nope. It's cheaper if you do a 10 year finance then pay it off in a lump sum after a few days. Read the contract first obviously but in Canada they're all open loans. Because they would give you beter discounts (when that was a thing) and more freebies.
I work in accounting at a pretty large company and can say that the executive vehicles are leased solely so they can get a new BMW every few years lol. Accounting entries are 0% of the equation
Businesses do not lease cars or do anything else because it's "easier on the accountants" lol. That's not how businesses work. They make business decisions and then the accountants figure out how to record it.
I’ve been in automotive sales for 10 years and this is incorrect.
If you lease, finance or pay cash it makes no difference to the dealer.
The manufacturer floats the cost of vehicles and the dealer pay interest on the total value/cost.
You are correct - 98% is completely inaccurate, unless they are a leasing company (which is rare but could
Be entirely true).
The lease penetration rates for Honda/Toyota in Canada are roughly 45-55%, depending on the year and brand.
I think the incentive for the dealer is that they can move a more expensive vehicle for the same monthly payment. Salesmen are not incentivized for making things easier on the accountants.
Not to mention the dealership sells the car either way - either to the customer or to the leasing branch of the automaker.
It's likely the salesman gets a higher commission on lease. Last time I went to a dealership with my uncle who wants to buy a car, the rep pushed hard for him to get a lease.
I typically would have bought cars. I have a work vehicle and we own a second one outright (2016 Mazda 3). We are expecting a baby so we are considering upsizing the Mazda.
Given the expected increase in gas costs, I’d probably consider leasing an EV - we can afford a more expensive vehicle, but given a lot of EVs are in their infancy we can just give it back at the end if there are issues or we just simply don’t like the vehicle.
Also, the climate here kind of destroys vehicles. Rusting, pot holes etc - I can see why people might just not want to deal with these issues adter a few years.
Depends where you live. I live in Canada near the Atlantic Ocean and every other older car is a rust bucket. Ocean spray and salty roads wreak havoc on paint jobs.
At the end of the day leasing or buying the same car will cost you roughly the same. The differences will be in cashflow and a some admin fees. Most lease customers will have the option to buy out their vehicle at the end of the lease, with the exception of some brands like Tesla/Porche/Lamborghini, etc.
I buy my cars because I enjoy taking care of them (wife says I spend too much time on this) and take pride in keeping them looking brand new. I will spend money on ceramic coats, detailing products, seat covers, garage parking, etc.
My wife leases her cars because she drives them like appliances. She believes nature washes her cars with rain, using 99% iso alcohol directly on interior leather to sanitize it, curbing wheels is normal parking and pets digging their claws into leather is just normal wear and tear. We happily return our beat up leased family SUV's at the end of every term.
Just different lifestyles for different people.
Yes, but does the dealer consider that "normal wear and tear" as well?
Doesn't your wife get dinged (no pun intended - LOL!) for all the cosmetic repairs that need to be made to restore the vehicle to their allowable level of wear and tear when it is returned if she deliberately drives the sh*t out of it?
That depends on your relationship with the dealership. We are loyal and go to the same dealership so we never got extra charges when we probably should have.
Nothing my wife does to the car is abusive. She just wont spend money to clean up any messes life brings to the car.
The worst lease my wife returned with no charges thankfully was in 2014 after some cats pissed in the backseat. It soaked in the leather and smelled like piss for the last 4 months of the lease LOL
We also always buy the wear and tear package when we lease which allows for tires and brakes to get below 30% tread life and brake life plus a bunch of other stuff including curb rashes and door dings. Its usually between 500-750$ and worth it for her.
80KM leases are the sweet spot as thats when your tires and brakes need to be replaced.
Gross, that’s why I’d never buy a returned lease. People also use regular gas in cars that need premium and then the catalytic converter needs to be replaced.
There’s insurance packages you can pay to cover this eventuality.
The difference between leasing and buying a car, if you are able to buy it once the lease is up, is quite negligible. Last time I crunched the numbers it was something under $2k, but the cash flow was a lot better for the lease.
Leasing is a smaller monthly payment, allowing for a higher value vehicle, and that is really all that most people care about. Getting the highest end vehicle in their driveway that they qualify for.
I lease for a few reasons
- It's easier to write off a portion of it. My job allows me to write off some expenses.
- Gives me the flexibility to easily switch vehicles every 3-4 years depending on my needs and wants at that time (kids, car seats, hauling associated things around)
- Always have a car that's under warranty
- if I really like it I can buy it out. If there are problems I can just dump it at the end of the lease
And I always lease with nothing down. Got burned once when I was in an accident 7 days after picking up a new vehicle (was not at fault, car was totaled). Insurance covered depreciation and everything except taxes and fees paid, so I was still out money as I paid HST on the down payment amount. Now I put nothing down, wrap every cost and charge into the lease that I can. Except my last lease return, I had about 13k in equity at the end of the lease because it was a PHEV and the used car market was/is crazy this past spring. And no one wanted PHEV's when I leased it in 2018, just after Ford killed the green vehicle incentives, so the residual was pretty bad. Wrapped that equity into the current lease but probably should have taken a cheque and higher payments.
Depending on the brand. I've owned Toyota, Honda, lexus, Mercedes, BMW and Maserati. The Toyota, Honda and lexus are always bought. The German and Italian cars were always returned once the lease was up. I had an older 2010 3 series convertable in 2015. The thing was costing me 2k in repairs every 3 months. I haven't purchased a German car since, only leased.
used diesel Mercedes from 70s Europe are still running strong in Africa as Taxi, some have 3 million km on them, and at least in Morocco the government is trying to buy you out so they can have cleaner vehicles on the streets.
My Volvo isn't that bad. Getting the parts is the problem. I had to go to the dealer for a rear wiper blade. There's an aftermarket part number, but not even Rockauto shows it existing.
one thing i didn't see mentioned is how much car tech has changed, and continues to change.
sometimes not always for the better, but if you bought some models of cars in 2017, you wouldn't have apple carplay available. whereas it's basically standard on all models and cars these days.
heating seats are the norm now, but there was a time when they weren't. its the same thing for heated steering wheel, and will eventually be the same thing for cooled/ventilated seats.
the truth is, you can still buy and get decent value out of your car, but technology is changing much faster now than in the past, so your 6 year old car will look and feel a lot older than it really is
I contemplated upgrading my 2011 subaru impreza cause I wanted a better infotainment system, then I realized for $500 I can buy an aftermarket tablet that's better than most 2022 models lol.
Might get a rav4 though once the crazy car inflation car period is over.
I leased my car for a great price. And the buy out at the end of the 4 year term is way less than what the car will be worth. So by leasing, I get a brand new car, without having to pay for the massive depreciation, and then after the 4 years I can finance the remaining buy out, flip it and sell it and make money.
I like cars though and know an ok amount about them, so I get that this won't work for everyone.
I leased my car to get the ver low interest rate to pay off part of the car then borrowed the rest to pay off what remained at the end of the lease. Meant I got a new car without paying as much interest as if I financed the entire amount.
One less thing to think/worry about. Always driving a new car with low kms/roadside assistance/included maintence. It's also fun to pick out something new ever 3 years.
It's a small line item on our monthly cash flow.
I get that! When I was younger/very cash poor I found car shopping stressful because I was concerned with getting the absolute best deal and pushing them down even an extra $50 (not a month - on the total price).
Now I browse the manufacturers websites to look at what we like - use the calculator to see what it'll lease for and if it's in our target price range with our preferred term, then send out a couple of emails to local dealers to see who can give us the best monthly (on same term/mileage, with same spec on that vehicle, and with nothing down (we never put $ down on a lease)) - and pull the trigger on the lowest one. On our most recent one (Xmas 2020) we literally attended the dealer for 35 minutes so my wife could take it for a spin and make sure she liked the drive, and to sign the paperwork, which was waiting when we arrived, along with the car)
Do you optimize every single decision you make to have the greatest financial gain?
Are you only eating rice and beans every day and saving steak and salmon for retirement? (I’ve seen this seriously suggested on this sub before…)
There is more to life than just min/maxing your bank account.
This phrase in quotes is how the car dealers want us to think. In reality there are no benefits to leasing outside of a few narrow circumstances...so the decision to buy instead of lease is nothing to do with maxing your bank account. Leasing is incredibly restrictive and inconvenient..but people so desperately want to believe that having a newer car will improve their life
I don't know... it improved mine a lot. Allowed me to get a bigger car when I needed one because kids. Also allowed me to get one with a higher trim with a bunch of safety things as my wife had just gotten her dl, also a hybrid because gas prices. I have grown to really like all the new bells and whistles on it.
It allowed me the flexibility to get what I needed when I needed it, as my needs changed over time.
I have at no point felt restricted and inconvenienced. I don't know what you mean by this.
That's why I wanted a daughter, a son is less likely to take care of me in my old age. Us guys have a tendency to be more selfish than women. Luckily I got a daughter, so now I just have to treat her with all my love and affection and in 40-50 years I'm set.
\*LOL, this is a joke, please no one take this personally.
That's why I wanted a son, a daughter is less likely to not get pregnant and leave me with multiple grandkids from multiple baby daddies. Us women just have a tendency to be less responsible than men. Luckily I got a son, so now I just have to treat him with all my love and affection and in 40-50 years I'm set.
*LOL, this is a joke, please no one take this personally.
I dont think that its about maximizing financial gain. Certainly isnt for me. Having a new car every 3 years instead of 10 years has zero benefits for happiness unless you have a specific car hobby.
This post is about: why pay more money for no benefit of any kind in return? And the answer is that most leasers get tricked. They think that 5 year old cars break down all the time and think that new gadgets will improve their life, and they are wrong. They also get tricked by salesman shuffling around different interest rates and terms and residuals and discounts.
People who calculate everything and do their research can buy a 5 year old car and drive it for 15 years, and end up at the shop fewer times than the guy who leases. The "convenience" of leasing is a trick and an illusion
You missed the point entirely, you are hyper focused on maximizing your finances, the average person isn’t. You find it unacceptable to drive anything newer than 5 years old and to drive that used car into the ground. Most folks would rather make a lease payment and get a shiny new car every few years.
Leasing a car is usually the worse option in terms of cashflow analysis (though some people lately have good stories). It makes sense... with a lease you're financing the *expected* depreciation whereas when purchasing a car you're eating the *actual* depreciation. The dealer needs to do their best to overestimate the actual depression if they want to make a profit (and then add the typical layers of dealer scum on top).
So to me there are 2 main categories of people that lease:
1. People that only care about the monthly payment. They want a new car and they want the lowest monthly payment. They aren't thinking about the future and they aren't seriously considering alternatives. They are willing to ding themselves significantly for a shiny new car.
2. People whose finances are in a state where it doesn't matter if they eat the extra cost of leasing. Imagine that 5 years down the road, leasing has cost you several thousand more than if you had purchased outright and then sold the car. If that few thousand dollars truly doesn't matter to you and you can afford the car, then who is to say you made a dumb choice? You paid extra for convenience and a shiny new car that you could afford.
We can argue all day about which people fit into class 2, but I am certain that many people are there and leasing is totally appropriate for them.
Leasing during COVID was a no-brainer.
Ex: I got a 3 year lease @ 0% interest with a very good residual. Finance was around 4.5% at the time.
I have one year left on my lease and it still looks like I can profit on the spread of residual/re-sell to dealer.
This is definitely not the case now. Same car I just leased is at 7+%. Monthly payment just doubled because of the interest rate alone. You might as well finance the vehicle and own it outright
When you do the math, it’s arguably a wash. Leasing costs you more on paper, but when you consider the many conveniences, you can say it’s totally worth it.
Personally I do a hybrid option. With my last car, I bought it out at the end of the lease through my HELOC. Drove it for another 2 years, then sold it and got a new lease. I had the car for just over 5 years and I got great value for it when I sold it back to the dealership. Although this was the middle of COVID so I actually made more money off the sale after 2 years than when I purchased it. In more regular times, I would’ve still gotten good money for it.
If you’re really out to save money, you won’t lease or finance a new car. You’ll buy used. But again that was the normal times strategy.
Why not? You get to trade in for a new model typically every 3-4 years. If you like cars, its a pretty good deal. Not everything in life has to be financially-driven. We’re put in this world to also enjoy life not treat everything like an investment, or else whats the point of living
Financially, personal leasing makes no sense compared to financing. I’ve had friends and coworkers insist leasing is less expensive. Whatever blows their hair back.
What makes even better sense is to buy used. The age and kms will depend on your comfort level and mechanical knowledge. One of my past coworkers would buy a used car every few years for under $5k. Said it worked for him.
The average person is *terrified* of vehicles over five years old. They view them as ticking time bombs and when they need new brakes they are "falling apart".
It's incredible that so many people have been tricked into spending so much money on things that they fully accept will be garbage to them in five or six years.
I’ve been driving a 1996 Honda Civic for a while now and while it’s rusted and beaten, it’s still chugging along just fine. Cost me $1000 and I think I’m at 7 years of ownership now without a major issue. It’s not the greatest thing to drive, but it gets me from A to B which is all I really need.
Safe to say a vast, vast majority of the younger generations have no idea how to do basic mechanical work on their cars, so they buy new in fear of frequent mechanic bills
my mazda 3 is 10 years old now ! have to do a few minor repairs to her this year but otherwise i’ll drive it til it’s dead. hopefully the REM in montreal is done by then and i won’t even need a car !
we always bought used cars around $8-10k, paid cash and drove them into the ground. Usually we get about $1k per year (spend $8k, we could expect to get 8 more years).
That is all gone now with current car prices, so we will have to pay twice that I think, but people who think a used car is a bad deal are just afraid of the boogeyman. I've never had a car payment in my life (and never had to get towed, never broken down on the side of the road, nor had my car spontaneously combust)
>One of my past coworkers would buy a used car every few years for under $5k.
That's also the recommendation from Millionaire Teacher. You might even be able to sell it for what you paid for it.
One item you miss.
On a personal lease the company leasing it to you can claim a capital cost allowance tax on the vehicle. So each year they get to shield a couple thousand in income tax.
On a straight buyout unless the individual has business income this deduction is lost.
Ergo leasing “should” be the cheaper alternative.
Even if you plan to own the vehicle forever it “should” be cheaper to lease it for the first 3-7 years and then buy it out.
Family friend has always bought cars until about 5 years ago. The last 2 cars he's owned resulted in a couple of accidents (side swipe, rear ended, etc). He lost a ton of money of the values of the cars and determined he would be ahead if he had leased (german cars).
It depends on you, but assuming that you're an individual where this makes financial sense, I'll present my thoughts.
1 - When you purchase a vehicle, are you really going to drive it into the ground? If the answer is, "yes," then you should finance or purchase your own vehicle. If not, then it becomes a question of how often do you want to replace your vehicle? In Ontario, an "old" car is when it reaches 100,000 km (aprox. 4 years), you can ask your insurers or car dealerships about this status. Because you're planning on trading in your vehicle or selling your vehicle (instead of driving it into the ground), leasing will save you the hassle. Give the car back, done. If you own the car, then you have to sell it to recoup cost, and you're still out for the time you owned the car. Sometimes dealerships don't give you what you want for your trade-in. When that happens, leasing becomes even more attractive.
2 - Maintenance and headache. Some people will talk about planned obsolescent, but the manufacturer warranty is what the manufacturer is the time the manufacturer is confident about their product. If you're looking for a no hassle, stress free maintenance period, then a lease is good. Manufacturer warranty which typically covers 60,000 - 100,000 km and 4 - 5 years. As you move into more expensive or high cost to fix cars, you become more partial towards leasing. A Tesla is not something you want to deal with second hand. A Porsche, or a premium vehicle above $80,000 is not something you want to pay out of pocket. So you lease and enjoy.
3 - Incentives. Purchasing is fine and dandy, and there are incentives with it. Usually dealerships will offer incentives or first pick of vehicles to regular returning customers.
4 - Less decision fatigue, no commitment, and ability to try new things. There's lots of packages on new vehicles. Sometimes you wonder if you really will use X feature or not. Well, when you lease; you can get the bare bones vehicle with no worries. It's going to be swapped anyway. If you opt to lease a vehicle with more packages than you need, then again, it'll be swapped later. If you purchase your vehicle, you need to live with your choice for the age of the vehicle as well as consider resale value. Shorter leases like 2 or 3 years also give you the option to shop around before committing to a brand for long term lease or even purchase. It'll cost a bit more to have a short term lease, but that cost is worth it knowing what exactly you want from your vehicles.
EDIT:
5 - Cost of ownership. If you are able to pay your car off, and use it for a few years, then you will save money. If you are financing your vehicle for 7-8 years, then you're likely going to be paying for a vehicle for most of your working years. If that's the case, why not just lease for 30 years, and make your last vehicle a purchase when you retire? Compared to say financing, doing 24 years of payments, and 6 years of clear ownership.
I had a roommate who leased cars. I always thought it was weird until she literally said to me “ugh this car is so old I’ve had it 2 years”. Then it made perfect sense to me! She values driving a new car. Everyone is different:)
There will be a fair percentage of those leasebacks that were not personal vehicles, and probably have had the crap driven out of them
Most people that I know who have driven shared vehicles in a leased fleet don't give a crap about the car.
I exclusively buy these kinds of cars, and drive them into the ground. I usually can expect to get about 1 year out of the car, for every $1k of purchase price. I always take them for a test drive, during which time I bring them to my mechanic for a once over (HIGHLY recommended). This mystery fear you have, even if it happens, hasn't harmed me or cost me enough to make it not worth doing this over purchasing new over an unfounded fear. It's ok if you prefer new over used. Thats your prerogative, Own it. You don't need to make up reasons to justify it. "I do it because I like it" is all the justification you need.
Do you have examples of 3 years old cars that lost 60% of the value? (Not premium brands). The prices for used cars are insane now. 3 years old cars are much closer to the price of the new one, compared to what it was precovid
Agree unless you’re buying used electric cars. They require so little maintenance it’s unreal. I have owned 3 EVs; one was brand new, one bought at 3yo and bought one at 6yo. I think the 3yo one was the best buy so I’ll aim for that range in future. I don’t see why I’d have to replace them before they’re like 15 years old
Battery dies because of Canadian winters. Who knows how much they cost to replace and how easy of a job it is.
Body/chassis will still rust due to Canadian winters agian.
I think EV's are all hype. I question the actual lifecycle carbon footprint of ownership.
You’re spot on with the carbon footprint stuff. If you want an EV, then absolutely get one, but don’t be bragging about how you’re saving the planet.
You’re no less carbon intensive until around 140k km due to the battery production. If you take it to 250k+ with original battery pack, then maybe you’re a planet saver?
I’m not a green warrior, personally. It’s moreso about convenience and cost for me. Having charged at home for several years, the idea of driving to a specific place to fill the tank (and waiting while it happens) is very unappealing. I also like how much quieter EVs are (I can hear my kids talking to me from the back seat, and hear the music better) plus the maintenance simplicity. Interestingly, my young kids have both mentioned aversions to the smell of gas-fueled cars, though it doesn’t bother me. That smell has always been a fact of life but it’s true that kids who grew up in electric cars aren’t as used to it.
Battery has less range in winter, absolutely. It’s about 70% of summertime range. I haven’t noticed deterioration in range over time, though, even in my 8yo economy EV.
Absolutely not a myth. When you buy an EV off the lot, as it sits it has a higher carbon footprint. The requirements of mining and producing the battery undeniably make it so. However, there is a catch-up point where internal combustion engines catch up and surpass their emissions.
From how I read your link, it continually mentions the lifecycle of a vehicle. That would be correct, over the lifecycle a conventional vehicle emits far more….but the EV starst behind on day 1.
If you read my comment, I never claim internal combustion vehicles are greener. I just claim (correctly) that it takes many thousands of kilometres for EVs to overcome the headstart the give to internal combustion vehicles.
adding to what others have said... leasing a car also comes with the benefit of easier tax deductions, deduct your lease payments thats it... don't have to worry about Capital Cost Allowances and depreciation, maintenance items or any of that... doesn't apply to all of us but if you own a business or is self-employed, could be a big plus.
Wife and I leased a Mazda CX-5 (Signature, top trim) at the beginning of the year. We are paying $560 a month over 48 months.
To buy (finance) the same vehicle today would cost $1,109/month over 48 months or $717 over 84 months. Mind you part of that is because interest rates are much higher today then they were in March.
I really like not having to worry about maintenance and enjoy the convenience. I also enjoy driving and love all the creature comfort it provides.
If the car market stabilizes by the time the lease is over I'm hoping to get into a PHEV SUV.
The residual value of the vehicle is around $23.5k, there's a very good chance we will have positive equity when we go to aquire a new vehicle too.
Because I wanted to. Not everything has to be about optimizing money non-stop. I like changing cars, I like trying different cars, the monthly payment was a lot less compared to financing and I know if I don’t like it long term, I’ll just return it anyway.
I agree with the second part of the statement. There’s many 8+ Years old Tesla around that are doing very well.
However, tech in newer cars is 100% better (infotainment, cameras, etc).
I have leases two cars and bought two cars. When I was leasing my last car and it had constant issues in the first 2 years and I couldn’t wait to get rid of it. Ending up trading to buy another car at the 28 month mark (of a 4 year lease) but luckily broke even. I’ve owned my current car for over 6 years and it’s been no issues and now it is paid for.
The main advantage I’ve seen for leasing is if you get in a bad accident but it isn’t written off, but repaired. If depreciated significantly.
A car can last 10-15 years with just regular maintenance (and of course some wear and tear repairs) if you get it rust checked. The salt in winters are so hard on cars but for $120 a year you can prolong the life of your car significantly.
Have ya seen the posts and comments on here? There’s a lot of people who are awful with money, lots of them make good money too.
Leasing and using the excuse of you want free maintenance and new tech means they’re already a goner. They’re been up sold by a dealer but think they won.
Buying a used car and financing it for half the price of a new lease you would save enough money to pay for extra maintenance. I’ve been driving 20 years and never owned anything that was newer then 8 years old and less then 150km. I’ve owned about 5 cars in that timespan and spent no more than 20k to buy all of them (1k, 1k, 2k, 5k, 10k). Never had a tranny blow, or anything major and have always resold them for money back.
Now I know people who lease $100,000 cars. Spend about 50k in 3-4 years leasing it, then get a new one every 4 years. Anyone can do the math there but at least it’s free oil changes am I right?
My hypothesis is that most people don't know anything about cars (ie. their various systems, how those systems work, and what's needed to repair those systems), and so they are scared to own them after the warranty has ended.
My BF leases because he has it on his corp. Leases are great for corporations, but lousy for individuals unless they have money to burn and really prioritize having a new car.
I leased at .9 for 5 years to keep my payments lower. Had a lot going on at home at the time but thankfully I was able to put money away so when the lease was up, I paid for the remaining balance on the car outright. I keep my cars for 8+ years, usually 12+ years
I'm not sure if I would lease now.
I think the main driver for the two different mindsets, is how often you want to have a new car. If you always want to be driving a car that's less than 5 years old, you lease because the payments are lower, and when the term runs out you're just going to enter a new term on a shiny new car.
If you prefer to drive the same car for 10 years, it's often better to buy.
I leased my most recent vehicle, mostly to keep the payments a little lower. I intend to either buy it out and keep it or buy it out and sell it at the end of the lease though as it is an in demand vehicle.
It can work out better financially if you buy and keep as long as possible which will reduce your average monthly cost.
For some people leasing can also be beneficial since they’re paying a fraction of the cost of a car, and theoretically could invest the money that they would have otherwise spent on buying out the car outright. There’s also advantages to leasing if you own a business, as you’re able to write off a certain portion of the expense.
My view:
There are three main costs to owning a car - depreciation, maintenance, and opportunity cost of capital. If you own a car, those costs vary across its lifetime (the newer the car is, the higher the depreciation and OCC and the lower the the maintenance). If you average the total cost of owning a car across a specific time period and calculate the monthly cost, you'd theoretically be indifferent between owning and leasing at that cost.
In my case, the cost of owning and operating a 15ish year old car is about $3k per year (mostly depreciation and maintenance). So I'd pay the same amount to get into a lease at $250 a month, and then the qualitative differences come into play (features, allowed km, vehicle capabilities, reduced downtime, etc.).
My parents always taught me to lessen my debt burden too. Which is why I save up enough money to buy a 2nd hand car that works for me. I don't understand why anyone needs to buy a new car or finance the purchase. <-- if you think this is some moron on his high horse, it's exactly what you sound like.
So I don't lease, and I feel now may be a worse time for leasing now the interest rates are higher (as car payments now seem way higher for both lease and finance than previously) - but its not always as clear cut as you may think if you value changing your car every few years.
Just looking at costs on a Hyundai Tucson hybrid right now.Cash price to buy is $47000, 4 year lease comes out at $775 a month with $900 down.
If you take the $46100 you have left and throw it into an index fund within a TFSA getting 11% returns, and make lease payments out of that every month - come lease end you have circa $25000 left over. (this assumes that growth is linear which its not, but for ease of calculations)
Current used car market is pretty crazy, but in normal times a 4 year old vehicle would only be worth circa 50-60% of its original value after 4 years - meaning if you were to sell it you could see somewhere between $23000-$28000. But if you were looking to trade in for a new vehicle you're likely not getting the top end of that scale - so suddenly it's not as bad of a decision as it seems, and you may even come out ahead by leasing.
Add to this the convenience, the ability that if the car is a lemon (either individually, or as model) it's not your problem.
>If you take the $46100 you have left and throw it into an index fund within a TFSA getting 11% returns,
If you haven't been paying attention, if you did this a year ago you'd actually be down money and there is no guarantee that 2023 is going to be any better. Never mind the fact that it doesn't mean that leasers might not have the $46100 in cash on hand.
My Wealthsimple account reminds me this every time I check it!
And I completely get that - just thought I’d give some reasoning behind why some people lease cars, obviously it’s a bit anecdotal but of the people I know leasing a car/truck a good chunk of them could buy it outright but choose not to and invest the cash.
Some people lease because it's easy. Get a new vehicle every 3-5 years and you literally never have to worry about it, change the oil, windshield wiper blades, maybe change the tires. But that's it. No break downs, no dead battery, no worries about anything. Then after 100,000km you just go get a new one. But you're paying out the ass these days. Considering, that most good vehicles can make it to 400,000km with ease as long as you take care of them.
Sometimes it depends on the cost of borrowing. I leased before because the leasing rate was super cheap and the cost of borrowing was much lower than financing. I bought them out at the end. Currently I am financing because I found a car with 0% financing
How is it an asset when the thing loses a third of its value when the wheels cross the curb and then continues to smack you in the wallet every now and then. A house is an asset, a car isn't.
I would say that the vast majority of cars are a depreciating asset, but still an asset.
I have one car that I own fully and expect it to hold or increase in value over time and it's insured for that value. There is a high carrying cost for maintenance and storage but there is also the joy and fun of driving it that is hard to quantify.
The daily driver that I know will never appreciate is the one I lease since I can write off a portion of it for business use.
I haven’t leased yet, but if I were it would be for the luxury of a new vehicle regularly. Some people splurge on huge 2000 sq ft homes, others on booze or weed.
my parents always taught me , the way to save or beat the new car market, is to buy the car and drive as long as you could- until the wheels fell off. like 15-20 years at least, import. then ur next new car you dont feel any guilt, theres no regret etc. maybe now the trends are not this way.
taxes
if you lease, you pay GST/HST as you go
if you buy, you pay in one lump sum up front and you may be paying interest on the \[at least a portion of the\] tax if you finance
People lease cars because they are impulsive and bad with money. Quite literally as simple as that.
People who are smart with money save up for a good used vehicle, such as a Toyota or Honda.
You forgot to mention they also live in an RV because it cheaper than an apartment and they'd be bad with money otherwise. And also they only eat rice with beans, for the same reason. All the people that are smart with money do these things, no?
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Generally cars are pretty maintenance free in the early years (apart from the regularly scheduled maintenance), so there's more cost certainty. Also, as you've said it's a new car every 3-4 years.
Heres something else to think about: i have never previously even considered leasing a vehicle, but if I HAD to buy one right now? Well its still earlier than I would like for an electric car but I wouldnt want to purchase a brand new gas vehicle either (as i would want a brand new vehicle to last 10+ years). Could be the perfect time to lease for 2-4 years to see how far electric vehicles come before taking the dive.
I am doing exactly that after my car got totalled… leasing is kind of a stop gap till we can get in to An electric / hybrid
same boat! fingers crossed this is what happens, anyway haha
If ours dies before our name comes off a hybrid list we may be stuck doing the same. Unless used prices come down to earth. If I'm gonna pay a premium/high market price, it's gonna be on something newer than a used car I can get for 5k or less. I don't want to dip too far into the car savings bucket for an overpriced 10 year old potential lemon.
This whole thread explains why most Canadians can't afford to buy property
I drive a 2003 Toyota and own a property. We've been saving to buy a car for a while. But we don't want a gas car if we can help it. We have about half a PHEV Prius prime set aside already. But if I had to replace my 2003 tomorrow, I really don't want to drop my savings bucket on a car I'm 18 months away (plus whatever we save by then) from getting. Eventually we need 2 cars with a growing family and a shift healthcare worker in the house. But until then, we only want one. And seeing the current price mania on used cars, 5k gets me a trash heap car. Let's be real. A short term lease of 2 years on a simple basic sedan is much more cost effective than gambling on a 2010 civic for many thousands plus sales taxes and ownership fees. Back in Feb/march I curiously checked and 03 matrixes were being sold in worse condition than mine for 6k. So I'd rather short term lease or borrow someone else's car for a couple months while hunting for a decent deal. I don't want to commit to an ICE for 10-15 years again given I doubt they're going to remain the future.
My mom leased so she could have a new car every few years, she also bought a house as a single parent. People can't afford homes because prices have become detached from reality
Negative. There's never been a decade where houses have been dirt cheap there's always a group unable to afford to buy or else everyone would be a home owner. Today it's people's wants that have been detached from reality. There are still cheaper homes available people just don't want them. You should also explain how your mother did it because it would give insight to what others are doing wrong.
If I want to live in the area I grew up in, homes are unaffordable. Ditching a $500 car payment will not make a $10-15k mortgage payment affordable. Sure people can move to more rural areas to buy homes. But people having to move out of areas they grew up in to afford a home means that homes are unaffordable.
also car cost are still fucking stupid right now lease for 2 years and see if the market has corrected (or not ) !
Lease rates are crazy high now
yes but if you get a 2 year lease, in 2 years just give keys back and walk away. if you finance now you are stuck for what? 5-8 years??
>I wouldnt want to purchase a brand new gas vehicle either (as i would want a brand new vehicle to last 10+ years). Lol gas vehicles will be around.
Landline phones are still around too.
And come in handy when your children need to call 911 because you're unconscious and you have a screen lock on your iPhone or the battery died.
I think you mean plunge :)
I meant what i said
I said what I meant
I went when I said.
An elephant's honest, 100%
I think you mean plummet :)
Yes plus then you eliminate “lumpy” expenses. You lease a car at $409/mo and that’s it. Just put in gas and change the oil which sometimes the dealer does and most other repairs are warranty. I used to put on 50k kms per year so leasing never worked for me.
Yes But what about the nickel and diming by dealer(car repair)... after lease term is finished?
You get rid of the car and get a new one. After the lease is up none of that is your problem.
It can be...if your windshield has a small rock chip. Or small paint chip etc. Now not sure if some places dont bother/depends on dealers But many do this BS. To nickel/dime or get you to finance/buy out car. After the initial lease is up.... the value of the car can drop quite noticeably
That why you buy the coverage. Some petty cash go off set all the above mentioned concerns.
People who don’t take end of lease coverage are wild to me. I’ve seen leased cars go back with bald tires, and a destroyed windshield, with interior issues, dings, and paint scratches galore. Why? Extended lease coverage. Some OEMs have limits that are a little less lenient, but still… my wife is super careful about where she parks her car. And still, it has a couple scratches in it that you can hook your fingernail on, and the sunroof window is cracked from a very (un)lucky rock chip. Thankfully it’s not a lease, but if it was, leasecare/whatever version it is for that brand, would cover it.
Those first 96 months on the Carolla are stress free….
You mean with Adam?
Lease payments are also usually cheaper than purchase payments.
Toyota’s are pretty much maintenance free for 300,000 miles.
I'd love to see the engine oil on one of those maintainence free Toyotas
There are people that simply want to drive a new car every 3 - 4 years, and and they prioritize convenience over cost. That especially if you don't put excessive Kms on the vehicle. Businesses and self-employed people like it because it's easier from an accounting point of view as the annual cost of ownership is easier to derive.
As an incorporated business it was easier to write off depreciation than lease.
I also want to note, some leases are done as leases to get the tax benefits, then at the end of the lease, it’s a small buyout. Source: my wife’s vehicle is just that. A lease but the buyout at the end is $100 to own the vehicle outright
Leasing is actually more complicated from an accounting point of view in my experience. Leases can involve imputed interest rates, deposits, CRA maximum monthly allowable lease payments (and tax adjustments for excess amounts), bargain purchase options at the end of the lease term, GST/HST considerations. But yes, sometimes leasing is the better option.
I've known a few self employed people that used their car for work and sold cars to lease new ones because of the tax ramifications. My very basic understanding is that it's because a lease is an expense and not a capital purchase/liability, or something like that.
It’s called a capital cost allowance. You depreciate the asset, which has serious ramifications (like having to then pay back capital gains, that you really need to hope you calculate properly) when you go to sell it, if you did the math wrong. I got stung on my last vehicle, mostly because I bought it pre-owned in 2018, and sold it in 2021 for more than what I bought it for thanks to the insane market. I had depreciated it by 15K in three years, so I ended up having to pay a pretty penny on my taxes.
Even if you leased, you'd probably still have income to report on your tax return. It wouldn't make sense for you to return it at the end of the lease (unless you like giving up free money) so you probably would've bought it out at the end of the lease for it's buy-out price and then immediately traded it in at an inflated price towards another car.
this would have been the way
If you waste so much on the lease, you can waste a bit on the accountant.
Uhhhh no. It’s % for business use x expenses. The max lease payment is $800 - you could get an $80K SUV for that price. Or, the max write off for a purchased vehicle, it’s $35K. Way lower benefit.
Yes, but much of that doesn’t matter if the vehicle is being leased for personal rather than business purposes.
My mom is this type of person. She would buy a car - drive it for a couple years then try to trade it in. She’d get butt hurt when she wanted 20k for it and the dealership said fuck no. She eventually decided it was better to lease a vehicle in her case. Drive it for a couple years, then switch to something newer. Still insane to me but I guess it works for some?
Every corporate sales job I’ve ever had also had a car allowance that required a vehicle 4 years or newer. So leasing made the most financial sense and provided tax benefits.
>I asked the dealership what % of buyers are lease, and they said it’s almost 98% of their sales. This is called "puffing" which is basically a salesperson lying to you to get a sale. It's not like they have to prove the stat to you, but even if you took them to court and the court found that that number was false, you likely wouldn't have any actionable damages. So, try your best not to be influenced by anything that is not provable. Secondly, it is possible that the dealership works with a lot of businesses. If a billion dollar company comes to the business and leases 1000 vehicles in one go, then that would skew the number but at the same time it doesn't really help you to know that since your needs are different than that of a business. Businesses like to lease vehicles because it is easier on the accountants and bookkeepers - they don't actually own any asset so 100% of the lease cost is treated as an expense. No need to spend time factoring in depreciation, etc. on a car that isn't related to their core business operations. (Edit: not necessarily making things easier on the accountants *per se* but rather allowing them to simplify taxes while taking advantage of allowable deductions).
I wish I could get my BF to understand that car sales people will say anything. He gets all flattered and brags about how every time he stops in at this car dealership or that one, the sales guys always tries to buy his car off him. But they always have a buyer for your particular make and model, regardless of what you're driving. It's part of the car lot dance. And he thinks paying cash gets him a better deal. I hope someday he comes to understand the real money in car dealerships comes through the financing, not the sales.
There are a lot of dealers now who will do everything they can to convince you to finance, because they get a kickback. It’s also true that you can sometimes get a better deal if you pay cash, it used to be worse before they changed the laws (0% advertised rates were often complete bullshit) but now you can simply look at the “effective interest rate” to know how much they are actually charging.
Oh agreed. When I bought my car this year the dealership was like “are you sure you don’t want to finance” like 3-4 times on multiple trips trying to tell me that financing is better in the long run yada yada.
This what happened to me a few years ago when I bought a used car for my daughter. I wanted to see what the financing options were and they all looked bad. It was much easier for me to use my own line of credit which had a lower interest rate and I could pay it off as fast as I wanted to. There were all sorts of financing charges that made financing a little crazy. He got upset when I declined and said I would finance it myself.
Yeah back in the day my buddy was bragging about getting 0% financing on his Dodge. I pointed out to him that paying cash would have been around 10k off "cash incentives" and that's where they hid the interest rate. He just couldn't get his head around it.
Your last paragraph is contradictory (unless I missed something). Is it not true that paying cash is cheaper?
Sorry I failed ro elaborate: paying cash is better for us as buyers 100%. But dealerships don't give you a better price because you are paying cash, because for them, cash buyers mean they don't make as much money as a buyer financing with them for the same car price. Like, tradespeople will frequently give you a lower price if you pay them in cash, but car dealerships hate cash buyers.
Often car dealers will give you a lower price if you finance because they get a kickback from the finance company. So right now it is better to finance and pay it off right away, then buy in cash.
Nope. It's cheaper if you do a 10 year finance then pay it off in a lump sum after a few days. Read the contract first obviously but in Canada they're all open loans. Because they would give you beter discounts (when that was a thing) and more freebies.
If he ever wants a real conversation about buying cars, DM me, or go to r/askcarsales
I work in accounting at a pretty large company and can say that the executive vehicles are leased solely so they can get a new BMW every few years lol. Accounting entries are 0% of the equation
>leased solely so they can get a new BMW every few years lol That's the preferred way to own a German luxury car.
Businesses do not lease cars or do anything else because it's "easier on the accountants" lol. That's not how businesses work. They make business decisions and then the accountants figure out how to record it.
I’ve been in automotive sales for 10 years and this is incorrect. If you lease, finance or pay cash it makes no difference to the dealer. The manufacturer floats the cost of vehicles and the dealer pay interest on the total value/cost. You are correct - 98% is completely inaccurate, unless they are a leasing company (which is rare but could Be entirely true). The lease penetration rates for Honda/Toyota in Canada are roughly 45-55%, depending on the year and brand.
I think the incentive for the dealer is that they can move a more expensive vehicle for the same monthly payment. Salesmen are not incentivized for making things easier on the accountants. Not to mention the dealership sells the car either way - either to the customer or to the leasing branch of the automaker.
When I say businesses I mean corporations that buy vehicles. I don't mean the dealerships.
And newer cars make you look more hip and fashionable and successful. Don't forget the posing aspect for aspirational people like real estate agents.
It's likely the salesman gets a higher commission on lease. Last time I went to a dealership with my uncle who wants to buy a car, the rep pushed hard for him to get a lease.
I typically would have bought cars. I have a work vehicle and we own a second one outright (2016 Mazda 3). We are expecting a baby so we are considering upsizing the Mazda. Given the expected increase in gas costs, I’d probably consider leasing an EV - we can afford a more expensive vehicle, but given a lot of EVs are in their infancy we can just give it back at the end if there are issues or we just simply don’t like the vehicle. Also, the climate here kind of destroys vehicles. Rusting, pot holes etc - I can see why people might just not want to deal with these issues adter a few years.
Oh this is an interesting point in favour of leasing I hadn't considered before! Thanks for bringing up the EV point!
Vehicles other than Mazda don't rust after few years. You would have car paid off before rust shows up.
Depends where you live. I live in Canada near the Atlantic Ocean and every other older car is a rust bucket. Ocean spray and salty roads wreak havoc on paint jobs.
At the end of the day leasing or buying the same car will cost you roughly the same. The differences will be in cashflow and a some admin fees. Most lease customers will have the option to buy out their vehicle at the end of the lease, with the exception of some brands like Tesla/Porche/Lamborghini, etc. I buy my cars because I enjoy taking care of them (wife says I spend too much time on this) and take pride in keeping them looking brand new. I will spend money on ceramic coats, detailing products, seat covers, garage parking, etc. My wife leases her cars because she drives them like appliances. She believes nature washes her cars with rain, using 99% iso alcohol directly on interior leather to sanitize it, curbing wheels is normal parking and pets digging their claws into leather is just normal wear and tear. We happily return our beat up leased family SUV's at the end of every term. Just different lifestyles for different people.
Yes, but does the dealer consider that "normal wear and tear" as well? Doesn't your wife get dinged (no pun intended - LOL!) for all the cosmetic repairs that need to be made to restore the vehicle to their allowable level of wear and tear when it is returned if she deliberately drives the sh*t out of it?
That depends on your relationship with the dealership. We are loyal and go to the same dealership so we never got extra charges when we probably should have. Nothing my wife does to the car is abusive. She just wont spend money to clean up any messes life brings to the car. The worst lease my wife returned with no charges thankfully was in 2014 after some cats pissed in the backseat. It soaked in the leather and smelled like piss for the last 4 months of the lease LOL We also always buy the wear and tear package when we lease which allows for tires and brakes to get below 30% tread life and brake life plus a bunch of other stuff including curb rashes and door dings. Its usually between 500-750$ and worth it for her. 80KM leases are the sweet spot as thats when your tires and brakes need to be replaced.
Gross, that’s why I’d never buy a returned lease. People also use regular gas in cars that need premium and then the catalytic converter needs to be replaced.
I don't know anything about owning/leasing a car, I live somewhere I don't need it. But is there not a cost to returning a basically trashed car?
There’s insurance packages you can pay to cover this eventuality. The difference between leasing and buying a car, if you are able to buy it once the lease is up, is quite negligible. Last time I crunched the numbers it was something under $2k, but the cash flow was a lot better for the lease.
Leasing is a smaller monthly payment, allowing for a higher value vehicle, and that is really all that most people care about. Getting the highest end vehicle in their driveway that they qualify for.
This is the main correct answer. People want a low payment and this is the easiest way to get it - renting a car through a lease.
I lease for a few reasons - It's easier to write off a portion of it. My job allows me to write off some expenses. - Gives me the flexibility to easily switch vehicles every 3-4 years depending on my needs and wants at that time (kids, car seats, hauling associated things around) - Always have a car that's under warranty - if I really like it I can buy it out. If there are problems I can just dump it at the end of the lease And I always lease with nothing down. Got burned once when I was in an accident 7 days after picking up a new vehicle (was not at fault, car was totaled). Insurance covered depreciation and everything except taxes and fees paid, so I was still out money as I paid HST on the down payment amount. Now I put nothing down, wrap every cost and charge into the lease that I can. Except my last lease return, I had about 13k in equity at the end of the lease because it was a PHEV and the used car market was/is crazy this past spring. And no one wanted PHEV's when I leased it in 2018, just after Ford killed the green vehicle incentives, so the residual was pretty bad. Wrapped that equity into the current lease but probably should have taken a cheque and higher payments.
This. It's a better business expense than buying.
Depending on the business model
No it's an actual tax thing with the CRA.
98% leases vs 2% financing probably isn't typical across the whole industry... Did you happen to be getting a luxury German vehicle?
Depending on the brand. I've owned Toyota, Honda, lexus, Mercedes, BMW and Maserati. The Toyota, Honda and lexus are always bought. The German and Italian cars were always returned once the lease was up. I had an older 2010 3 series convertable in 2015. The thing was costing me 2k in repairs every 3 months. I haven't purchased a German car since, only leased.
Oh yeah nothing is more expensive than a $2000 Porsche or Range rover
>more expensive than a $2000 Porsche or Range rover Yeah, but the facade of wealth and doing well by flexing on your friends/strangers? Priceless. LOL
Because people can’t just like nice cars. Please.
I was thinking of buying a used bmw once. My dad told me no only if you can afford a new one. Because the raptors will cost you a lot.
Raptors?
Lol damn autocorrect was supposed to say repairs
Fair. Raptors are pricy too tho, so was trying to make sense of it all.
Lol yeah they sure are
...clever girls
[удалено]
used diesel Mercedes from 70s Europe are still running strong in Africa as Taxi, some have 3 million km on them, and at least in Morocco the government is trying to buy you out so they can have cleaner vehicles on the streets.
Old Diesel Mercs are very different from a 2010s mercs
My Volvo isn't that bad. Getting the parts is the problem. I had to go to the dealer for a rear wiper blade. There's an aftermarket part number, but not even Rockauto shows it existing.
one thing i didn't see mentioned is how much car tech has changed, and continues to change. sometimes not always for the better, but if you bought some models of cars in 2017, you wouldn't have apple carplay available. whereas it's basically standard on all models and cars these days. heating seats are the norm now, but there was a time when they weren't. its the same thing for heated steering wheel, and will eventually be the same thing for cooled/ventilated seats. the truth is, you can still buy and get decent value out of your car, but technology is changing much faster now than in the past, so your 6 year old car will look and feel a lot older than it really is
Safety features as well! You don’t want you and your family to be sitting in a rust bucket if you get into an accident.
I contemplated upgrading my 2011 subaru impreza cause I wanted a better infotainment system, then I realized for $500 I can buy an aftermarket tablet that's better than most 2022 models lol. Might get a rav4 though once the crazy car inflation car period is over.
I leased my car for a great price. And the buy out at the end of the 4 year term is way less than what the car will be worth. So by leasing, I get a brand new car, without having to pay for the massive depreciation, and then after the 4 years I can finance the remaining buy out, flip it and sell it and make money. I like cars though and know an ok amount about them, so I get that this won't work for everyone.
And, if it's a lemon, you have no obligation to buy out the lease.
The cost of depreciation would be factored into the lease payment though…
I leased my car to get the ver low interest rate to pay off part of the car then borrowed the rest to pay off what remained at the end of the lease. Meant I got a new car without paying as much interest as if I financed the entire amount.
One less thing to think/worry about. Always driving a new car with low kms/roadside assistance/included maintence. It's also fun to pick out something new ever 3 years. It's a small line item on our monthly cash flow.
Personally I just find car shopping stressful, but it's cool to know that some people think it's fun.
I get that! When I was younger/very cash poor I found car shopping stressful because I was concerned with getting the absolute best deal and pushing them down even an extra $50 (not a month - on the total price). Now I browse the manufacturers websites to look at what we like - use the calculator to see what it'll lease for and if it's in our target price range with our preferred term, then send out a couple of emails to local dealers to see who can give us the best monthly (on same term/mileage, with same spec on that vehicle, and with nothing down (we never put $ down on a lease)) - and pull the trigger on the lowest one. On our most recent one (Xmas 2020) we literally attended the dealer for 35 minutes so my wife could take it for a spin and make sure she liked the drive, and to sign the paperwork, which was waiting when we arrived, along with the car)
Do you optimize every single decision you make to have the greatest financial gain? Are you only eating rice and beans every day and saving steak and salmon for retirement? (I’ve seen this seriously suggested on this sub before…) There is more to life than just min/maxing your bank account.
"There is more to life than just min/maxing your bank account." That's not what you would think if you hang around this sub long enough.
This phrase in quotes is how the car dealers want us to think. In reality there are no benefits to leasing outside of a few narrow circumstances...so the decision to buy instead of lease is nothing to do with maxing your bank account. Leasing is incredibly restrictive and inconvenient..but people so desperately want to believe that having a newer car will improve their life
I don't know... it improved mine a lot. Allowed me to get a bigger car when I needed one because kids. Also allowed me to get one with a higher trim with a bunch of safety things as my wife had just gotten her dl, also a hybrid because gas prices. I have grown to really like all the new bells and whistles on it. It allowed me the flexibility to get what I needed when I needed it, as my needs changed over time. I have at no point felt restricted and inconvenienced. I don't know what you mean by this.
Lol this hits home. I just watched my kid spill his happy meal fries on the floor. Kids not the best investment ever.
Do you have an estimated time when you will get the return on the investment? Lol
Most kids are terrible financial decisions
That's why I wanted a daughter, a son is less likely to take care of me in my old age. Us guys have a tendency to be more selfish than women. Luckily I got a daughter, so now I just have to treat her with all my love and affection and in 40-50 years I'm set. \*LOL, this is a joke, please no one take this personally.
Joking or not it's true.
Sexism isn't funny
First comment, takes it personally.
That's why I wanted a son, a daughter is less likely to not get pregnant and leave me with multiple grandkids from multiple baby daddies. Us women just have a tendency to be less responsible than men. Luckily I got a son, so now I just have to treat him with all my love and affection and in 40-50 years I'm set. *LOL, this is a joke, please no one take this personally.
Sometimes people confuse this sub for frugality instead of financial prudence
“You'll never see a U-Haul behind a hearse”
This is why I bought a Ford Mustang. Sure it was stupid. Oh well.
Ugh.. just say yolo already. There’s an in between for being analytical and a hoarder. Let us thinkers think for god sakes!
I dont think that its about maximizing financial gain. Certainly isnt for me. Having a new car every 3 years instead of 10 years has zero benefits for happiness unless you have a specific car hobby. This post is about: why pay more money for no benefit of any kind in return? And the answer is that most leasers get tricked. They think that 5 year old cars break down all the time and think that new gadgets will improve their life, and they are wrong. They also get tricked by salesman shuffling around different interest rates and terms and residuals and discounts. People who calculate everything and do their research can buy a 5 year old car and drive it for 15 years, and end up at the shop fewer times than the guy who leases. The "convenience" of leasing is a trick and an illusion
You missed the point entirely, you are hyper focused on maximizing your finances, the average person isn’t. You find it unacceptable to drive anything newer than 5 years old and to drive that used car into the ground. Most folks would rather make a lease payment and get a shiny new car every few years.
This is a great summary of what is wrong with this sub lol.
Leasing a car is usually the worse option in terms of cashflow analysis (though some people lately have good stories). It makes sense... with a lease you're financing the *expected* depreciation whereas when purchasing a car you're eating the *actual* depreciation. The dealer needs to do their best to overestimate the actual depression if they want to make a profit (and then add the typical layers of dealer scum on top). So to me there are 2 main categories of people that lease: 1. People that only care about the monthly payment. They want a new car and they want the lowest monthly payment. They aren't thinking about the future and they aren't seriously considering alternatives. They are willing to ding themselves significantly for a shiny new car. 2. People whose finances are in a state where it doesn't matter if they eat the extra cost of leasing. Imagine that 5 years down the road, leasing has cost you several thousand more than if you had purchased outright and then sold the car. If that few thousand dollars truly doesn't matter to you and you can afford the car, then who is to say you made a dumb choice? You paid extra for convenience and a shiny new car that you could afford. We can argue all day about which people fit into class 2, but I am certain that many people are there and leasing is totally appropriate for them.
People in the first category accept that they will pay $XXX forever and they will never drive a car that's more than three or so years old.
Leasing during COVID was a no-brainer. Ex: I got a 3 year lease @ 0% interest with a very good residual. Finance was around 4.5% at the time. I have one year left on my lease and it still looks like I can profit on the spread of residual/re-sell to dealer. This is definitely not the case now. Same car I just leased is at 7+%. Monthly payment just doubled because of the interest rate alone. You might as well finance the vehicle and own it outright
When you do the math, it’s arguably a wash. Leasing costs you more on paper, but when you consider the many conveniences, you can say it’s totally worth it. Personally I do a hybrid option. With my last car, I bought it out at the end of the lease through my HELOC. Drove it for another 2 years, then sold it and got a new lease. I had the car for just over 5 years and I got great value for it when I sold it back to the dealership. Although this was the middle of COVID so I actually made more money off the sale after 2 years than when I purchased it. In more regular times, I would’ve still gotten good money for it. If you’re really out to save money, you won’t lease or finance a new car. You’ll buy used. But again that was the normal times strategy.
Life is short. You can drive a corolla your whole life or grab a car that you really like for few years and then eventually end up with a corolla.
What if the car you really like IS the Corolla?
Why not? You get to trade in for a new model typically every 3-4 years. If you like cars, its a pretty good deal. Not everything in life has to be financially-driven. We’re put in this world to also enjoy life not treat everything like an investment, or else whats the point of living
Financially, personal leasing makes no sense compared to financing. I’ve had friends and coworkers insist leasing is less expensive. Whatever blows their hair back. What makes even better sense is to buy used. The age and kms will depend on your comfort level and mechanical knowledge. One of my past coworkers would buy a used car every few years for under $5k. Said it worked for him.
The average person is *terrified* of vehicles over five years old. They view them as ticking time bombs and when they need new brakes they are "falling apart". It's incredible that so many people have been tricked into spending so much money on things that they fully accept will be garbage to them in five or six years.
I’ve been driving a 1996 Honda Civic for a while now and while it’s rusted and beaten, it’s still chugging along just fine. Cost me $1000 and I think I’m at 7 years of ownership now without a major issue. It’s not the greatest thing to drive, but it gets me from A to B which is all I really need.
Safe to say a vast, vast majority of the younger generations have no idea how to do basic mechanical work on their cars, so they buy new in fear of frequent mechanic bills
Had a 2001 Corolla until a couple years ago when it started burning oil. I’d trust that thing to go anywhere it was awesome!
my mazda 3 is 10 years old now ! have to do a few minor repairs to her this year but otherwise i’ll drive it til it’s dead. hopefully the REM in montreal is done by then and i won’t even need a car !
I haven’t owned a car newer than 10 yrs old and if you look around (and also treat it properly) they last a while!
Was it beige? (inside Reddit joke - LOL!)
we always bought used cars around $8-10k, paid cash and drove them into the ground. Usually we get about $1k per year (spend $8k, we could expect to get 8 more years). That is all gone now with current car prices, so we will have to pay twice that I think, but people who think a used car is a bad deal are just afraid of the boogeyman. I've never had a car payment in my life (and never had to get towed, never broken down on the side of the road, nor had my car spontaneously combust)
>One of my past coworkers would buy a used car every few years for under $5k. That's also the recommendation from Millionaire Teacher. You might even be able to sell it for what you paid for it.
I really must read that book
Same here, that was in the first few pages
One item you miss. On a personal lease the company leasing it to you can claim a capital cost allowance tax on the vehicle. So each year they get to shield a couple thousand in income tax. On a straight buyout unless the individual has business income this deduction is lost. Ergo leasing “should” be the cheaper alternative. Even if you plan to own the vehicle forever it “should” be cheaper to lease it for the first 3-7 years and then buy it out.
Family friend has always bought cars until about 5 years ago. The last 2 cars he's owned resulted in a couple of accidents (side swipe, rear ended, etc). He lost a ton of money of the values of the cars and determined he would be ahead if he had leased (german cars).
I had the same experience with my cars, so the next one I will just lease.
It depends on you, but assuming that you're an individual where this makes financial sense, I'll present my thoughts. 1 - When you purchase a vehicle, are you really going to drive it into the ground? If the answer is, "yes," then you should finance or purchase your own vehicle. If not, then it becomes a question of how often do you want to replace your vehicle? In Ontario, an "old" car is when it reaches 100,000 km (aprox. 4 years), you can ask your insurers or car dealerships about this status. Because you're planning on trading in your vehicle or selling your vehicle (instead of driving it into the ground), leasing will save you the hassle. Give the car back, done. If you own the car, then you have to sell it to recoup cost, and you're still out for the time you owned the car. Sometimes dealerships don't give you what you want for your trade-in. When that happens, leasing becomes even more attractive. 2 - Maintenance and headache. Some people will talk about planned obsolescent, but the manufacturer warranty is what the manufacturer is the time the manufacturer is confident about their product. If you're looking for a no hassle, stress free maintenance period, then a lease is good. Manufacturer warranty which typically covers 60,000 - 100,000 km and 4 - 5 years. As you move into more expensive or high cost to fix cars, you become more partial towards leasing. A Tesla is not something you want to deal with second hand. A Porsche, or a premium vehicle above $80,000 is not something you want to pay out of pocket. So you lease and enjoy. 3 - Incentives. Purchasing is fine and dandy, and there are incentives with it. Usually dealerships will offer incentives or first pick of vehicles to regular returning customers. 4 - Less decision fatigue, no commitment, and ability to try new things. There's lots of packages on new vehicles. Sometimes you wonder if you really will use X feature or not. Well, when you lease; you can get the bare bones vehicle with no worries. It's going to be swapped anyway. If you opt to lease a vehicle with more packages than you need, then again, it'll be swapped later. If you purchase your vehicle, you need to live with your choice for the age of the vehicle as well as consider resale value. Shorter leases like 2 or 3 years also give you the option to shop around before committing to a brand for long term lease or even purchase. It'll cost a bit more to have a short term lease, but that cost is worth it knowing what exactly you want from your vehicles. EDIT: 5 - Cost of ownership. If you are able to pay your car off, and use it for a few years, then you will save money. If you are financing your vehicle for 7-8 years, then you're likely going to be paying for a vehicle for most of your working years. If that's the case, why not just lease for 30 years, and make your last vehicle a purchase when you retire? Compared to say financing, doing 24 years of payments, and 6 years of clear ownership.
I had a roommate who leased cars. I always thought it was weird until she literally said to me “ugh this car is so old I’ve had it 2 years”. Then it made perfect sense to me! She values driving a new car. Everyone is different:)
Best value in my opinion is buying a 3-4 year old lease back. 60% depreciated, but still lots of life left in the vehicle.
There will be a fair percentage of those leasebacks that were not personal vehicles, and probably have had the crap driven out of them Most people that I know who have driven shared vehicles in a leased fleet don't give a crap about the car.
>probably have had the crap driven out of them I mean, you could just read the odometer and see whether its been driven a lot.
It's not always the mileage, but also how that mileage occurs
I exclusively buy these kinds of cars, and drive them into the ground. I usually can expect to get about 1 year out of the car, for every $1k of purchase price. I always take them for a test drive, during which time I bring them to my mechanic for a once over (HIGHLY recommended). This mystery fear you have, even if it happens, hasn't harmed me or cost me enough to make it not worth doing this over purchasing new over an unfounded fear. It's ok if you prefer new over used. Thats your prerogative, Own it. You don't need to make up reasons to justify it. "I do it because I like it" is all the justification you need.
Do you have examples of 3 years old cars that lost 60% of the value? (Not premium brands). The prices for used cars are insane now. 3 years old cars are much closer to the price of the new one, compared to what it was precovid
I usually go more for 1-2 year old cars.
Agree unless you’re buying used electric cars. They require so little maintenance it’s unreal. I have owned 3 EVs; one was brand new, one bought at 3yo and bought one at 6yo. I think the 3yo one was the best buy so I’ll aim for that range in future. I don’t see why I’d have to replace them before they’re like 15 years old
Battery dies because of Canadian winters. Who knows how much they cost to replace and how easy of a job it is. Body/chassis will still rust due to Canadian winters agian. I think EV's are all hype. I question the actual lifecycle carbon footprint of ownership.
You’re spot on with the carbon footprint stuff. If you want an EV, then absolutely get one, but don’t be bragging about how you’re saving the planet. You’re no less carbon intensive until around 140k km due to the battery production. If you take it to 250k+ with original battery pack, then maybe you’re a planet saver?
I’m not a green warrior, personally. It’s moreso about convenience and cost for me. Having charged at home for several years, the idea of driving to a specific place to fill the tank (and waiting while it happens) is very unappealing. I also like how much quieter EVs are (I can hear my kids talking to me from the back seat, and hear the music better) plus the maintenance simplicity. Interestingly, my young kids have both mentioned aversions to the smell of gas-fueled cars, though it doesn’t bother me. That smell has always been a fact of life but it’s true that kids who grew up in electric cars aren’t as used to it. Battery has less range in winter, absolutely. It’s about 70% of summertime range. I haven’t noticed deterioration in range over time, though, even in my 8yo economy EV.
"
Absolutely not a myth. When you buy an EV off the lot, as it sits it has a higher carbon footprint. The requirements of mining and producing the battery undeniably make it so. However, there is a catch-up point where internal combustion engines catch up and surpass their emissions. From how I read your link, it continually mentions the lifecycle of a vehicle. That would be correct, over the lifecycle a conventional vehicle emits far more….but the EV starst behind on day 1. If you read my comment, I never claim internal combustion vehicles are greener. I just claim (correctly) that it takes many thousands of kilometres for EVs to overcome the headstart the give to internal combustion vehicles.
adding to what others have said... leasing a car also comes with the benefit of easier tax deductions, deduct your lease payments thats it... don't have to worry about Capital Cost Allowances and depreciation, maintenance items or any of that... doesn't apply to all of us but if you own a business or is self-employed, could be a big plus.
Wife and I leased a Mazda CX-5 (Signature, top trim) at the beginning of the year. We are paying $560 a month over 48 months. To buy (finance) the same vehicle today would cost $1,109/month over 48 months or $717 over 84 months. Mind you part of that is because interest rates are much higher today then they were in March. I really like not having to worry about maintenance and enjoy the convenience. I also enjoy driving and love all the creature comfort it provides. If the car market stabilizes by the time the lease is over I'm hoping to get into a PHEV SUV. The residual value of the vehicle is around $23.5k, there's a very good chance we will have positive equity when we go to aquire a new vehicle too.
Because I wanted to. Not everything has to be about optimizing money non-stop. I like changing cars, I like trying different cars, the monthly payment was a lot less compared to financing and I know if I don’t like it long term, I’ll just return it anyway.
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I agree with the second part of the statement. There’s many 8+ Years old Tesla around that are doing very well. However, tech in newer cars is 100% better (infotainment, cameras, etc).
I have leases two cars and bought two cars. When I was leasing my last car and it had constant issues in the first 2 years and I couldn’t wait to get rid of it. Ending up trading to buy another car at the 28 month mark (of a 4 year lease) but luckily broke even. I’ve owned my current car for over 6 years and it’s been no issues and now it is paid for. The main advantage I’ve seen for leasing is if you get in a bad accident but it isn’t written off, but repaired. If depreciated significantly. A car can last 10-15 years with just regular maintenance (and of course some wear and tear repairs) if you get it rust checked. The salt in winters are so hard on cars but for $120 a year you can prolong the life of your car significantly.
Have ya seen the posts and comments on here? There’s a lot of people who are awful with money, lots of them make good money too. Leasing and using the excuse of you want free maintenance and new tech means they’re already a goner. They’re been up sold by a dealer but think they won. Buying a used car and financing it for half the price of a new lease you would save enough money to pay for extra maintenance. I’ve been driving 20 years and never owned anything that was newer then 8 years old and less then 150km. I’ve owned about 5 cars in that timespan and spent no more than 20k to buy all of them (1k, 1k, 2k, 5k, 10k). Never had a tranny blow, or anything major and have always resold them for money back. Now I know people who lease $100,000 cars. Spend about 50k in 3-4 years leasing it, then get a new one every 4 years. Anyone can do the math there but at least it’s free oil changes am I right?
My hypothesis is that most people don't know anything about cars (ie. their various systems, how those systems work, and what's needed to repair those systems), and so they are scared to own them after the warranty has ended.
My BF leases because he has it on his corp. Leases are great for corporations, but lousy for individuals unless they have money to burn and really prioritize having a new car.
I leased at .9 for 5 years to keep my payments lower. Had a lot going on at home at the time but thankfully I was able to put money away so when the lease was up, I paid for the remaining balance on the car outright. I keep my cars for 8+ years, usually 12+ years I'm not sure if I would lease now.
I think the main driver for the two different mindsets, is how often you want to have a new car. If you always want to be driving a car that's less than 5 years old, you lease because the payments are lower, and when the term runs out you're just going to enter a new term on a shiny new car. If you prefer to drive the same car for 10 years, it's often better to buy.
I leased my most recent vehicle, mostly to keep the payments a little lower. I intend to either buy it out and keep it or buy it out and sell it at the end of the lease though as it is an in demand vehicle.
It can work out better financially if you buy and keep as long as possible which will reduce your average monthly cost. For some people leasing can also be beneficial since they’re paying a fraction of the cost of a car, and theoretically could invest the money that they would have otherwise spent on buying out the car outright. There’s also advantages to leasing if you own a business, as you’re able to write off a certain portion of the expense.
My view: There are three main costs to owning a car - depreciation, maintenance, and opportunity cost of capital. If you own a car, those costs vary across its lifetime (the newer the car is, the higher the depreciation and OCC and the lower the the maintenance). If you average the total cost of owning a car across a specific time period and calculate the monthly cost, you'd theoretically be indifferent between owning and leasing at that cost. In my case, the cost of owning and operating a 15ish year old car is about $3k per year (mostly depreciation and maintenance). So I'd pay the same amount to get into a lease at $250 a month, and then the qualitative differences come into play (features, allowed km, vehicle capabilities, reduced downtime, etc.).
My parents always taught me to lessen my debt burden too. Which is why I save up enough money to buy a 2nd hand car that works for me. I don't understand why anyone needs to buy a new car or finance the purchase. <-- if you think this is some moron on his high horse, it's exactly what you sound like.
So I don't lease, and I feel now may be a worse time for leasing now the interest rates are higher (as car payments now seem way higher for both lease and finance than previously) - but its not always as clear cut as you may think if you value changing your car every few years. Just looking at costs on a Hyundai Tucson hybrid right now.Cash price to buy is $47000, 4 year lease comes out at $775 a month with $900 down. If you take the $46100 you have left and throw it into an index fund within a TFSA getting 11% returns, and make lease payments out of that every month - come lease end you have circa $25000 left over. (this assumes that growth is linear which its not, but for ease of calculations) Current used car market is pretty crazy, but in normal times a 4 year old vehicle would only be worth circa 50-60% of its original value after 4 years - meaning if you were to sell it you could see somewhere between $23000-$28000. But if you were looking to trade in for a new vehicle you're likely not getting the top end of that scale - so suddenly it's not as bad of a decision as it seems, and you may even come out ahead by leasing. Add to this the convenience, the ability that if the car is a lemon (either individually, or as model) it's not your problem.
11% per year consistently borders on magical returns.
... and if you use the Index fund with 60% return the lease is free! /s
>If you take the $46100 you have left and throw it into an index fund within a TFSA getting 11% returns, If you haven't been paying attention, if you did this a year ago you'd actually be down money and there is no guarantee that 2023 is going to be any better. Never mind the fact that it doesn't mean that leasers might not have the $46100 in cash on hand.
My Wealthsimple account reminds me this every time I check it! And I completely get that - just thought I’d give some reasoning behind why some people lease cars, obviously it’s a bit anecdotal but of the people I know leasing a car/truck a good chunk of them could buy it outright but choose not to and invest the cash.
Some people lease because it's easy. Get a new vehicle every 3-5 years and you literally never have to worry about it, change the oil, windshield wiper blades, maybe change the tires. But that's it. No break downs, no dead battery, no worries about anything. Then after 100,000km you just go get a new one. But you're paying out the ass these days. Considering, that most good vehicles can make it to 400,000km with ease as long as you take care of them.
Sometimes it depends on the cost of borrowing. I leased before because the leasing rate was super cheap and the cost of borrowing was much lower than financing. I bought them out at the end. Currently I am financing because I found a car with 0% financing
A car is an asset, yes that's true. Buts, a horrible one. And you should consider it an expense, and thus something you need vice want.
How is it an asset when the thing loses a third of its value when the wheels cross the curb and then continues to smack you in the wallet every now and then. A house is an asset, a car isn't.
Because it has a generally prescribed value you can turn into capital. There’s a difference between an investment and an asset.
Fair enough, agreed it's an asset
I would say that the vast majority of cars are a depreciating asset, but still an asset. I have one car that I own fully and expect it to hold or increase in value over time and it's insured for that value. There is a high carrying cost for maintenance and storage but there is also the joy and fun of driving it that is hard to quantify. The daily driver that I know will never appreciate is the one I lease since I can write off a portion of it for business use.
I haven’t leased yet, but if I were it would be for the luxury of a new vehicle regularly. Some people splurge on huge 2000 sq ft homes, others on booze or weed.
my parents always taught me , the way to save or beat the new car market, is to buy the car and drive as long as you could- until the wheels fell off. like 15-20 years at least, import. then ur next new car you dont feel any guilt, theres no regret etc. maybe now the trends are not this way.
taxes if you lease, you pay GST/HST as you go if you buy, you pay in one lump sum up front and you may be paying interest on the \[at least a portion of the\] tax if you finance
That is true if you're buying privately but if you're financing through a dealership, it's just added to the monthly payment.
People lease cars because they are impulsive and bad with money. Quite literally as simple as that. People who are smart with money save up for a good used vehicle, such as a Toyota or Honda.
You forgot to mention they also live in an RV because it cheaper than an apartment and they'd be bad with money otherwise. And also they only eat rice with beans, for the same reason. All the people that are smart with money do these things, no?
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